Big Lots 2011 Annual Report Download - page 144

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2010 Compared to 2009
Net Sales
Net sales by merchandise category, in dollars and as a percentage of total net sales, and net sales change in
dollars and percentage from 2010 compared to 2009 were as follows:
2010 2009 Change
(in thousands)
Consumables ................. $1,452,783 29.3% $1,456,370 30.8% $ (3,587)(0.2)%
Furniture .................... 829,725 16.8 716,785 15.2 112,940 15.8
Play n’ Wear ................. 811,750 16.4 806,247 17.1 5,503 0.7
Home ....................... 783,860 15.8 717,744 15.2 66,116 9.2
Seasonal .................... 642,220 13.0 591,321 12.5 50,899 8.6
Hardlines & Other ............. 431,906 8.7 438,305 9.2 (6,399)(1.5)
Net sales ................. $4,952,244 100.0% $4,726,772 100.0% $225,472 4.8%
Net sales increased $225.5 million or 4.8% to $4,952.2 million in 2010 compared to $4,726.8 million in 2009.
The increase in net sales was principally driven by the increase in net stores in 2010, which increased net sales
by $114.3 million, and a 2.5% increase in comparable store sales, which increased net sales by $111.1 million.
The average number of stores in operation throughout 2010 and 2009 was approximately 1,380 stores and 1,354
stores, respectively. The Furniture, Home, and Seasonal categories had the largest sales gains in 2010. Sales
increased in all departments of the Furniture category driven by sales of new styles introduced during the year,
improvement in the quality of goods, and successful promotional events targeted around certain holiday selling
periods. The Home category sales increased across most of its departments with the largest gain in domestics,
as we have improved the value proposition and quality of our product offerings. The Seasonal category increase
was due to higher sales of Christmas, lawn & garden, and summer merchandise as customers responded to
both our updated Christmas assortment and the value and newness offered in certain of our lawn & garden
and summer items. The Play n’ Wear category sales improvement was primarily driven by the electronics
department in the first half of 2010 through the sales of video games, which we began selling in the third fiscal
quarter of 2009, partially offset by declining sales trends of toys. The Consumables category decrease was
primarily due to lower food sales, as customers did not respond as expected to our offerings and assortment
during the second half of 2010. The decrease in the Hardlines & Other category was primarily driven by the
absences of certain drugstore closeout deals in 2010 that occurred in 2009.
Gross Margin
Gross margin dollars increased $93.2 million, or 4.9%, to $2,012.5 million in 2010 compared to $1,919.3 million
in 2009. Gross margin as a percentage of net sales was 40.6% in both 2010 and 2009. The primary contributor to
the increased gross margin dollars was higher net sales of $225.5 million, which increased gross margin dollars
by approximately $91.6 million. The gross margin rate remained flat at 40.6% in 2010 as compared to 2009. In
2010, we experienced positive trends with lower markdowns, lower shrink costs, and the impact of favorable
merchandise mix, which were offset by higher inbound freight costs and lower initial markups on certain items
sold during the Christmas selling season. Lower markdowns and favorable merchandise mix impact were the
result of strong sales in our higher margin Seasonal and Home categories. Our lower shrink rates were driven by
positive results in our annual physical inventories. The increase in inbound freight costs was primarily driven
by higher diesel fuel costs and higher domestic carrier costs.
Selling and Administrative Expenses
Selling and administrative expenses increased $44.1 million, or 2.9%, to $1,576.5 million in 2010 compared
to $1,532.4 million in 2009. The increase was primarily due to higher sales and a net increase of 37 stores in
2010. Compared to 2009, the largest increases were store payroll costs of $24.5 million, credit card/bank fees of
$10.3 million, store rent expense of $9.1 million, and store facility and operation costs of $8.0 million. Partially
offsetting these items was a decrease in advertising expenses of $4.2 million. The increase in store payroll was
principally due to the incremental number of stores, store pre-opening costs, and higher sales. The increase